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Income Tax

Section 148A Compliance Cannot Overcome Limitation Bar: ITAT Bangalore Quashes Reassessment

By CA Sandeep Kanoi Income Tax Judiciary November 4, 2026
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Case Law Details

TaxGuru Citation
2026 taxguru.in 17872
Case Name
NAG Projects Private Limited Vs DCIT (ITAT Bangalore)
Appeal Number
Premium Access
Date of Judgement/Order
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Related Assessment Year
2015-16
Courts
All ITAT, ITAT Bangalore
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NAG Projects Private Limited Vs DCIT (ITAT Bangalore)

Summary: The Bangalore “B” Bench of the Income Tax Appellate Tribunal allowed NAG Projects Private Limited’s appeal for AY 2015-16 and quashed the reassessment consequent to the Section 148 notice dated 30.07.2022. It held that the notice was barred by limitation under the first proviso to Section 149(1), since the six-year period under the erstwhile reassessment regime had expired on 31.03.2022. The Tribunal followed its coordinate Bench’s decision in Abbur Subramanyam Venkata Kumar, IT(IT)A No.664/Bang/2025, dated 30.03.2026.

The company challenged the CIT(A)/NFAC order dated 22.07.2025. Its original assessment under Section 143(3), dated 21.12.2017, had accepted the returned income of Rs.62,24,880. According to the company’s additional-ground petition, it developed residential plots under arrangements with landowners, identified buyers and signed sale deeds as a consenting party; each plot’s sale value was below Rs.20 lakh. It contended that it was neither the purchaser nor seller and disputed the TDS disallowance. Paragraph 5 of the Tribunal’s order records an addition of Rs.3,32,87,214 and assessed income of Rs.3,95,12,094 in the reassessment dated 30.05.2023. The grounds described the dispute as disallowance under Section 40(a)(ia) for alleged non-deduction under Section 194IA.

By a petition dated 09.09.2025, the assessee sought admission of additional legal grounds alleging that the reassessment notice was time-barred, had been issued by the jurisdictional officer instead of the faceless officer and did not bear a Document Identification Number. Relying on CIT v. Sahara India, CIT v. Indian Bank, Gundathur Thimmappa & Sons v. CIT and National Thermal Power Co. Ltd. v. CIT, the Tribunal admitted the grounds because they raised legal questions on facts already on record and required no fresh investigation.

The Revenue argued that the original notice under Section 148 had been issued on 30.06.2021, before expiry of the six-year period. Following Union of India v. Ashish Agarwal, proceedings under Section 148A were undertaken, and both the Section 148A(d) order and fresh Section 148 notice were issued on 30.07.2022. The Revenue relied on the fifth and sixth provisos to Section 149(1), contending that the proceedings were within the permissible timeline. The fresh notice had also received approval from the Principal Chief Commissioner of Income Tax, Karnataka and Goa region.

The Tribunal considered whether the fresh notice could survive after 31.03.2022. The extensively reproduced coordinate Bench decision discussed Union of India v. Rajeev Bansal and the first proviso’s protection against reopening earlier assessment years after expiry of the old-regime period. That decision treated Section 148A compliance and the claimed statutory exclusions as insufficient to overcome the limitation bar. It also discussed Mohammed Yaseen and Tarish Investment and Trading Company of the Karnataka High Court, together with other precedents reproduced in those decisions.

Respectfully following the coordinate Bench, the Tribunal held the notice dated 30.07.2022 to be time-barred and quashed the consequential reassessment order dated 30.05.2023. The appeal was allowed. The other grounds became academic: the Tribunal did not separately decide the faceless jurisdiction or DIN objections, the merits of the TDS disallowance, or the consequential interest and penalty grounds.

Cases Discussed

FULL TEXT OF THE ORDER OF ITAT BANGALORE

This appeal at the instance of the assessee is directed against the order of the ld. CIT(A)/NFAC dated 22.07.2025 vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1078772369(1) passed u/s 250 of the Income Tax Act, 1961 (in short “the Act”) for the assessment year 2015-16.

2. The assessee has raised the following grounds of appeal:-

A. LEGAL GROUNDS:

1. The order dated 22.07.2025 passed by the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [*CIT(A)”] under section 250 of the Income-tax Act, 1961 (“Act”) dismissing the appeal and upholding the additions made by the Assessing Officer (“Ld AO”) in the assessment order dated 30.03.2023 passed under section 147 read with section 144B of the Act without considering the submissions of the Appellant, is contrary to law and facts of the case and is passed in contravention of principles of natural justice.

Additional grounds:

2. The CIT(A) and Ld AO erred in not appreciating that the re-assessment proceedings initiated by the Ld AO under section 148 of the Act vide notice dated 30.07.2022 for the AY 2015-16 was barred by limitation.

3. The CIT(A) and Ld AO erred in law in not appreciating that the assessment proceedings initiated were bad in law in as much as the notice under section 148 of the Act dated 30.07.2022 was issued by the Jurisdictional Assessing Officer, DCIT, Circle 3(1)(1), Bengaluru (“JAO”) when the same ought to have been issued by the Faceless Assessing Officer (“FAO”).

4. The CIT(A) and Ld AO erred in not appreciating that the re-assessment notice dated 30.07.2022 issued by the JAO without mentioning the Document Identification Number (“DIN”) was bad in law and hence void ab- initio.

B. GROUNDS ON MERITS: –

(i) Disallowance of under section 40(a)(ia) of the Act:

5. The CIT(A) and Ld AO erred in disallowing Rs.3,32,87,214/- under section 40(a)(ia) for non-deduction of tax at source (“TDS”) under section 194IA of the Act.

6. The CIT(A) and Ld AO erred in not appreciating that there was no transfer under section 2(47) of the Act as the Appellant was neither purchaser nor seller of the property but was only developing the plots and offering marketing services to the seller (landlord).

7. The CIT(A) and Ld AO erred in not appreciating that the Appellant was only a ‘consenting party’ to the sale deed executed between the purchaser and the landlord.

8. The CIT(A) and Ld AO erred in not appreciating that the cost of the plots was less than Rs.20 lakhs and hence no TDS was required to be made on the same.

c. CONSEQUENTIAL GROUNDS:

9. The CIT(A) and AO have erred in charging interest under section 234B and 234C of the Act.

10. The CIT(A) and AO erred in initiating penalty proceedings under section 271(1)(c) of the Act.

Each of the above grounds are independent and without prejudice to the other ground of appeal preferred by the Appellant.

The Appellant reserves the right to further add, alter or amend each one of the above grounds of appeal

3. The assessee has also filed a petition dated 09.09.2025 for the admission of additional grounds of appeal, which is reproduced below for ease of reference & convenience:

BEFORE THE HON’BLE INCOME TAX APPELLATE TRIBUNAL,
BENGALURU BENCHES, BENGALURU
IN THE CASE OF NAG PROJECTS PRIVATE LIMITED (PAN: AADCN3672K) ASSESSMENT YEAR 2015-16
GROUNDS OF APPEAL

PETITION FOR ADMISSION OF ADDITIONAL GROUND

It is humbly prayed that the additional ground of appeal raised by the Petitioner as Ground No.2, 3 and 4 of the appeal may kindly be admitted.

The Petitioner vide additional ground No.2 is challenging the validity of the re- assessment notice under section 148 of the Income-tax Act, 1961 (“Act”) dated 30.07.2022 as being barred by limitation as the six year limitation as per the erstwhile provisions of section 149 of the Act had expired on 31.03.2022 i.e., before the issuance of the notice.

The Petitioner vide the additional ground of appeal No.3 is challenging the validity of the re-assessment notice under section 148 of the Act dated 30.07.2022 issued by Jurisdictional Assessing Officer, DCIT, Circle 3(1)(1), Bengaluru (“JAO”) when the same ought to have been issued by the Faceless Assessing Officer (“FAO”). Further, the said notice does not bear any Document Identification Number (“DIN”) and hence, the said notice is issued in violation of the provisions of the Act and Income-tax Rules, 1962 (“Rules”). The Petitioner therefore is raising additional ground of appeal No.4.

The Petitioner therefore submits that the re-assessment notice and the consequent re-assessment proceedings including the re-assessment order, dated 30.05.2023 passed by the FAO under section 147 read with section 144B are bad in law and void ab-initio and hence, deserve to be quashed.

1. Background

The Petitioner is engaged in real estate property residential plotting business for which it had entered into MOU with the landlords to develop their land and market the same by identifying the prospective buyers basically individuals. The Petitioner paid token advance to landlords and agreed to pay the remaining agreement amount against registration of each plot of land in favour of the prospective buyers. During the financial year (“FY”) 2014-15, the Petitioner developed the land after obtaining the ‘necessary conversion of land and obtaining permissions. The Petitioner after developing the land, divided the same into residential plots and has marketed the same to various buyers, each plot sale value being less than Rs.20 lakhs. The Petitioner entered into ‘agreement of sale’ with prospective buyers. Subsequently, sale deed is entered between the landlords and the prospective buyers with the Petitioner signing as consenting party, in terms of the MOU. It is submitted that the buyers availed housing loans and the amount received the assessee and after registration of the plot the amount has been paid to the land lord against each plot registration individually.

The Petitioner filed its return of income for AY 2015-16 on 29.05.2015 declaring total income of Rs.62,24,880/-. Subsequently, scrutiny assessment proceedings were initiated during which, it was explained by the Appellant that it never got the registration of the property in its name or obtained any general power of attorney etc., and each plot has been registered by the landlord in favour of each buyer directly. The learned Assessing Officer (“Ld AO”) passed the assessment order dated 21.12.2017 under section 143(3) of the Act accepting the returned income of the Petitioner.

Thereafter, CG & AG Audit team raised objections to which, the Petitioner submitted the explanation and documents which were accepted and the audit objections were dropped. The issue was thereafter examined by the learned Commissioner of Income-tax (“CIT”) in revisionary proceedings under section 263 of the Act. The CIT after verified the matter, dropped the revisionary proceedings.

The JAO thereafter initiated re-assessment proceedings and issued notice dated 30.06.2021 under section 148 of the Act. The JAO following the Supreme Court ruling in Union of India vs. Ashish Agarwal, issued a fresh notice dated 30.07.2022 under section 148 of the Act pursuant to passing order under section 148A(d) of the Act.

The Petitioner thereafter filed its return of income in response to the notice issued under section 148 of the Act declaring income of Rs.62,24,880/-. The case was thereafter transferred to the FAO to complete the re-assessment in a faceless

manner. The FAO accordingly completed the re-assessment and passed the order dated 30.05.2023 under section 147 read with section 144B of the Act assessing the income of the Petitioner at Rs.3,32,87,214/- and raising demand of tax (including interest) of Rs.2,15,78,790/-.

Being aggrieved by the re-assessment order, the Petitioner had preferred appeal before the Commissioner of Income-tax (Appeals) [“CIT(A)”] which has been dismissed.

The Petitioner humbly prays that the additional ground of appeal may kindly be admitted for reasons stated hereunder.

2. Reasons for raising additional grounds of appeal (i) In respect of additional ground of appeal No.2:

The re-assessment notice dated 30.07.2022 was invalid as per the Supreme Court’s ruling in Union of India & others vs. Rajeev Bansal (2024) 469 ITR 46 (SC), where the Additional Solicitor General stated that the Revenue would drop notices issued on or after 01.04.2022 for AY 2015-16. The decision in Rajeev Bansal case has subsequently been followed by the Hon’ble Supreme Court in the case of Assistant Commissioner of Income Tax & others vs. Nehal Ashit Shah – SLP (Civil) Diary No.(S) -57209/2024 dated 04.04.2025.

Reliance in this regard is placed on the following case laws:

(a) Hon’ble Supreme Court in Supreme Court in Deepak Steel and Power Ltd. vs. Central Board of Direct Taxes and Ors. (Civil Appeal No.5177/2025) decided on 02.04.2025;

(b) Jurisdictional Hon’ble Karnataka High Court in the case of Shri Siddaiah Gurappaji [W.P. No.20292 of 2023 (T-IT)];

(c) Hon’ble Delhi High Court in Makemytrip India Pvt. Ltd. v. Deputy Commissioner of Income Tax Circle 16 (1) Delhi & Anr.: Neutral Citation No.: 2025:DHC:1892-DB;

(d) Hon’ble Delhi High Court in the case of Chandra Prakash Srivastava, Ex- Director of Aten Portfolio Managers Private Limited (now dissolved) vs. ITO, Ward 1(1), Delhi [W.P.(C) No.5893/2023];

(e) Delhi Bench of this Hon’ble ITAT in Sunita Salhotra vs. ITO, Ward-43(1), Delhi (ITA No.4306/Del/2024);

It is therefore submitted that the notice dated 30.07.2022 issued under section 148 of the Act deserves to be quashed. The Petitioner therefore submits that the consequent re-assessment proceedings including the re-assessment order dated 30.03.2023 passed by the FAO under section 147 read with section 144B are bad in law and deserve to be quashed.

(ii) In respect of additional ground of appeal No.3:

The Petitioner submits that as per section 151A of the IT Act, the Central Government was required to make a scheme for the purposes of assessment, re- assessment or re-computation under section 147 or issuance of notice under section 148 or conducting enquiries or issuance of show cause notice or passing of order under section 148A or sanction for issue of such notice under section 151 so as to impart greater efficiency, transparency and accountability. In pursuance of the above, the CBDT issued the notification dated 29.03.2022, whereby E- assessment of Income Escaping Assessment Scheme, 2022 (‘E-assessment Scheme’ for short) was introduced which came into force with effect from 29.03.2022.

The Petitioner submits that section 144B inserted by virtue of the Finance Act, 2021, with effect from 01.04.2021 provides for faceless assessment and sub- section 1 of the said newly inserted Section 144B is an non-obstante clause. The relevant portion of section 144B(1) is re-produced herein under:

“Notwithstanding anything to the contrary contained in any other provision of this Act, the assessment, reassessment or recomputation under sub-section (3) of section 143 of under section 144 or under section 147 as the case may be with respect to the cases referred to in sub-section (2), shall be made in a faceless manner as per the following procedure, namely:-“

The Petitioner submits that the notice dated 30.07.2022 issued under section 148 of the Act in the present case has been issued by the JAO, even though, the said notice was required to be issued by the by the FAO as per the section 151A read with the notification issued by the CBDT bearing S.O.1466(E) dated 29.03.2022. The relevant portion of the said notification is as follows:

“3, Scope of the Scheme. — For the purpose of this Scheme,

(a) assessment, reassessment or recomputation under section 147 of the Act,

(b) issuance of notice under section 148 of the Act,

shall be through automated allocation, in accordance with risk management strategy formulated by the Board as referred to in section 148 of the Act for issuance of notice, and in a faceless manner, to the extent provided in section 144B of the Act with reference to making assessment or reassessment of total income or loss of assessee.”

After introduction of the said Notification, it is mandatory for the Revenue to conduct / initiate proceedings under the section 147, 148 and 148A of the IT Act in a faceless manner, i.e, by the NFAC i.e., FAO, and not the JAO, for the purposes as specified in. the section 151A of the IT Act.

Reliance in this regard is placed on the following decisions:

(a) | Hon’ble Bombay High Court in Hexaware Technologies Limited Vs ACIT (Writ Petition No. 1778 of 2023)

(b) | Hon’ble Telangana High Court in Kankanala Ravindra Reddy Vs ITO (Writ Petition No.25903/2022)

(c) | Hon’ble Punjab & Haryana High Court in Jatinder Singh Bhangu v UoI (CWP No.15745/2024);

(d) Hon’ble Madras High Court in TVS Credit Services Ltd. v. DCIT (WP No.22402 of 2024 & WMP No.13336 of 2023);

(e) Chennai Bench of this Hon’ble ITAT in the case of Kumaresan Bhagavathiperumal Pillai (ITA No.1357/Chy/2025)

The Petitioner therefore submits that the re-assessment notice dated 30.07.2022 issued by JAO under section 148 of the Act is legally infirm. It is settled legal principle that if the notice under section 148 initiating the re-assessment proceedings is legally invalid then the ensuing proceedings initiated by such notice are also legally invalid.

The Petitioner therefore submits that the consequent re-assessment proceedings including the re-assessment order dated 30.03.2023 passed by the FAO under section 147 read with section 144B are bad in law and deserve to be quashed.

(iii) In respect of additional ground of appeal No.4:

The Petitioner submits that the CBDT vide Circular 19/2019 dated 14.08.2019 has mandated that no communication shall ‘be issued by any income tax authority relating to assessment, appeals, orders, statutory or otherwise, exemptions, enquiry, investigation, verification of information, penalty, prosecution, rectification,

approval, etc., to the assessee or any other person, on or after 01.10.2019 unless a computer generated DIN has been allotted and is duly quoted in the body of such communication. The Circular further provides that in case of exceptional circumstances where there are technical difficulties in generating / allotting / quoting the DIN and issuance of communication electronically, the communication may be issued manually with prior written approval of the Chief Commissioner / Director General of Income-tax and, the communication issued under the said circumstances has to state the fact that the communication is issued manually without a DIN and the date of obtaining the approval of the Chief Commissioner / Director General has to be mentioned in the format specified in the Circular. The Circular provides that any communication issued which is not in conformity with the Circular shall be treated as invalid and shall be deemed to have never been issued.

Reliance is placed on the following case laws:

(a) Hon’ble Madras High Court dated 10.06.2025 in the case of CIT, International Taxation, Chennai v. M/s. Laserwoods US Inc. (TCA No.46 of 2025);

(b) Hon’ble Bombay High Court in the case of Ashok Commercial Enterprises v. ACIT reported in [2023] 154 taxmann.144 (Bom.);

(c) | Chennai Bench of this Hon’ble ITAT in the case of Kaliyaperumal Padmanaban v. ITO, Ward 2, Cuddalore (ITA No.1176/Chy/2025).

The Petitioner submits that the re-assessment notice issued by the JAO does not bear any DIN and is in violation of the binding order of the CBDT Circular No.19/2019 dated 14.08.2019 JAO has neither mentioned the DIN on the body of the notice nor has it mentioned the exceptional circumstance for issuance of the order manually without specifying the DIN. The omission of the JAO in not complying with the aforesaid CBDT Circular and communicating the re-assessment notice dated 30.07.2022 without quoting DIN is invalid. Hence, the notice has no legal sanctity and is void ab-initio. The Petitioner therefore submits that the consequent re-assessment proceedings including the re-assessment order dated 30.03.2023 passed by the FAO under section 147 read with section 144B are bad in law and deserve to be quashed.

The Petitioner relies on the decision of the Hon’ble Supreme Court in National Thermal Power Corporation Ltd (1998) 229 ITR 383 (SC) wherein it has been held that the assessee can raise points of law before the Tribunal which were not raised earlier.

Therefore, the Petitioner submits that the additional ground of appeal raised as Ground No.2, 3 and 4 of the appeal may kindly be admitted.

4. We have heard both the parties on admission of additional grounds. The Lucknow bench of the Hon’ble Allahabad High Court in the case of CIT Vs. Sahara India (2012) 347 ITR 331 held that a legal issue can be raised at any stage but there shall be good reason for admitting the additional ground. In our Opinion all the facts are already on record and there is no necessity of investigation of any fresh facts for the purpose of the adjudication of above grounds. Further, we are also of the opinion that the additional grounds raised in the present case are purely legal in nature & therefore these are critical for a fair adjudication of the matter. The Hon’ble Madras High Court in the case of CIT Vs Indian Bank (2015) 230 Taxman 635 (Madras) held that Rule 11 of the I.T. Rules makes it clear that the assessee has the right to raise additional grounds and if the same is beneficial to the assessee, the same should be considered by the Tribunal.

4.1 Further, the Hon’ble Karnataka High Court in the case of Gundathur Thimmappa & Sons vs. CIT, Mysore, reported in (1968) 70 ITR 70 held that when the point raised by the assessee is a point which went to the root of the matter and affected not merely his liability to pay tax but also jurisdiction of the Tribunals and Authorities themselves to subject the amount concerned to tax, the Appellate Tribunal had the discretion to permit point of law to be raised for the first time in appeal because the question went to the root of the case. The Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs CIT (1998) 229 ITR 383 held that undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, we fail to see why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. Accordingly, we are inclined to admit the additional legal grounds for the purpose of adjudication as there was no investigation of any fresh facts otherwise on record and these are critical for a fair adjudication of the matter.

5. Now having admitted the additional grounds raised by the assessee, we first proceed to adjudicate the second additional legal ground raised with regard to the reassessment proceedings initiated by the AO u/s 148 of the Act vide notice dated 30.07.2022 for the A.Y.2015-16 to be barred by limitation. Undisputedly, the AO had passed the assessment order u/s 143(3) of the Act on 21.12.2017 by accepting the returned income of the assessee. Subsequently, a show cause notice u/s 148A(b) of the Act was issued to the assessee. In response, the assessee submitted its reply to the notices. After considering the facts of the case and the explanation offered by the assessee company, an order under clause-(d) of section 148A of the Act was passed on 30.07.2022. Thereafter, the AO on the same day i.e., on 30.07.2022 had also issued notice u/s 148 of the Act after obtaining the prior approval of Pr. Chief Commissioner of Income Tax, Karnataka and Goa region accorded on 30.07.2022 vide reference no. F.No.275/Pr.CCIT/Tech/2022-23 and directed the assessee company to furnish a return of income for the A.Y.2015- 16 within 30 days from the date of service of the notice. Thereafter, the AO completed the reassessment proceeding u/s 147 r.w.s 144B of the Act on 30.05.2023 by adding Rs.3,32,87,214/- as deemed income u/s 40(a)(i)(a) of the Act and assessed on a total income of Rs.3,95,12,094/-. Now before us, the AR of the assessee is contending that the notice issued u/s 148 of the Act on 30.07.2022 for the A.Y.2015-16 is barred by limitation in view of 1st Proviso to Section 149(1) of the Act and accordingly, subsequent proceedings including the reassessment order passed on 30.05.2023 are non-est and void ab initio and liable to be quashed.

6. The ld. DR on the other hand vehemently supported the orders of the lower authorities and vehemently submitted that in terms of 5th and 6th Provisos to section 149(1) of the Act, the order u/s 148A(d) of the Act as well as notice issued u/s 148 of the Act both dated 30.07.2022 were well within the prescribed timeline. Further, the ld. DR submitted that initially the notice u/s 148 was issued on 30.06.2021 which was well before 31.03.2022 and subsequently by following the ruling of the Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal, the fresh notice dated 30.07.2022 u/s 148 of the Act was issued pursuant to passing order u/s 148A(d) of the Act and accordingly, the notice issued u/s 148 of the Act dated 30.07.2022 was well within the time.

7. We have heard the rival submissions and perused the material available on record. Undisputedly, the present case relates to AY.Y.2015-16. It is an undisputed fact that initially the notice u/s 148 of the Act was issued on 30.06.2021 and thereafter by following the judgement of the Apex Court in the case of Union of India vs. Ashish Agarwal, a show cause notice u/s 148A(b) of the Act was issued and accordingly order u/s 148A(d) of the Act was passed on 30.07.2022. Thereafter, the notice u/s 148 of the Act was also issued for the A.Y.2015-16 on the same day i.e., on 30.07.2022. It is also an undisputed fact that the last date for issuing the notice u/s 148 of the Act under the erstwhile section 149(1)(b) of the Act for the A.Y.2015-16 was 31.03.2022 (six years from the end of the assessment year). Thus, the core issue revolves around whether the issuance of notice u/s 148 of the Act on 30.07.2022 for the A.Y.2015-16 falls within the permissible time limit or not? In a similar facts and circumstances and for the same A.Y.2015-16, the coordinate bench of this tribunal in the case of Abbur Subramanyam Venkata Kumar in IT(IT)A No.664/Bang/2025 vide order dated 30.03.2026 has held as under:-

“7. We have heard the rival submission and perused the material available on record. Undisputedly, the present case relates to AY 2015-16. It is also an undisputed fact that the notice u/s. 148A(b) of the Act was issued on 25/03/2022 and accordingly the order u/s. 148A(d) of the Act was passed on 08/04/2022. Thereafter, the notice u/s. 148 of the Act was issued for the AY 2015-16 on the same day i.e. on 08/04/2022. It is also an undisputed fact that the last date for issuing the notice u/s 148 of the Act under the erstwhile section 149(1)(b) of the Act for the AY 2015-16 was 31/03/2022 (6 years from the end of the assessment year). Now, it is apposite here to note down the chronological date of event for a better appreciation of fact which are detailed below-

Particulars Date Paper Book reference
Last date for issuing notice u/s. 148 under erstwhile section 149(1)(b) for AY 2015-16 (6 years from end of AY) 31/03/2022 NA
Issuance of Show cause notice u/s. 148A(b) 25/03/2022 6
Due Date/time provided to respond to the show cause notice issued u/s. 148A(b) as cited in the Notice u/s. 148A(b) 01/04/2022 6
Date of response by the Assessee Not Filed
Approval by Specified Authority- PCCIT (IT), Delhi as cited in the order u/s. 148A(d) 08/04/2022 13
Date of Order u/s. 148A(d) 08/04/2022 10
Issuance of Notice u/s. 148 08/04/2022 15

Thus, the core issue revolves around whether the issuance of the notice undersection 148 of the Act on April 08, 2022, for AY 2015-16, falls within the permissible time limits or not?

7.1 Before proceeding further, it is apposite here to mention the relevant provisions of the Act as it stood then which are as follows- Time limit for notice.

149. (1) No notice under section 148 shall be issued for the relevant assessment year,-

(a) if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b);

(b) if three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing officer has in his possession books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year:

Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if such notice could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause(b) of sub-section (1) of this section,as they stood immediately before the commencement of the Finance Act, 2021:

Provided further that the provisions of this sub-section shall not apply in case, where a notice under section 153A, or section 153C read with section 153A, is required to be issued in relation to a search initiated under section 132 or books of account, other

documents or any assets requisitioned under section 132A, on or before the 31st day of March, 2021:

Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause(b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded:

Provided also that where immediately after the exclusion of the period referred to in the immediately preceding proviso, the period of limitation available to the Assessing Officer for passing an order under clause (d) of section 148A is less than seven days, such remaining period shall be extended to seven days and the period of limitation under this sub-section shall be deemed to be extended accordingly.

Explanation.- For the purposes of clause (b) of this sub-section, “asset” shall include immovable property, being land or building or both, shares and securities, loans and advances, deposits in bank account.

7.2 On going through the above provisions, we take note of the fact that for the AY 2015-16, the old 6 years’ time limit expired on March 31, 2022. Therefore, the notices issued between 01/04/2021 and 31/03/2022, for escaped income of Rs. 50lakhs or more, could be valid if section 148A procedures were followed and the notice was not time-barred under the old law as of 31/03/2021. However, the notices issued after 31/03/2022, would generally be invalid as they would have become time-barred under the old law, failing the test of the first proviso to section 149(1) of the Act. Thus, the validity of the notice issued u/s 148 of the Act on April 08, 2022, for AY 2015-16, is primarily governed by the first proviso to the substituted Section 149(1) of the Act. This proviso stipulates that no notice under Section 148 shall be issued for an assessment year beginning on or before April 1, 2021, if such notice could not have been issued under the time limits of the old regime (pre-Finance Act, 2021). It is an undisputed fact that for AY 2015-16, the last date for issuing a notice under the old regime was March 31, 2022. Since the notice was issued on April 08, 2022, it was issued after this cut-off date, rendering it time-barred under the old law. Consequently, the firstproviso to the amended Section 149(1) acts as a bar, making the notice invalid, irrespective of the procedural compliance with Section 148A of the Act. We are also of the opinion that the exclusion of time under the 3rd& 4thprovisos to Section 149(1) of the Act for Section 148A proceedings does not revive a notice that was already time-barred under the old regime as per the first proviso. We are of the considered opinion that the extended time limits of the new regime do not apply at all if the old limitation period had already expired as on 31/03/2022 & therefore the exclusions under the 3rd& 4thprovisos to Section 149(1) of the Act do not arise at all. Thus, under the unamended Section 149(1)(b) of the Act, a notice under Section 148 of the Act could generally be issued within six years from the end of the relevant assessment year, provided the income escaping assessment amounted to or was likely to amount to one lakh rupees or more. Therefore, the last date for issuing a notice for AY 2015-16 under the old regime was March 31, 2022. Thus, the first proviso to amended section 149(1) acts as a statutory bar, preventing the issuance of a notice under Section 148 for an assessment year like AY 2015-16 (which began on or before April 1, 2021) if such notice could not have been issued under the time limits of the old law. In the present case as the notice in question was issued on April 08, 2022, which is after March 31, 2022 and therefore the condition precedent for issuing a notice for AY 2015-16 under the new regime, as laid down by the first proviso to Section 149(1), is not met. The notice, having been issued after the expiry of the time limit under the old law, is therefore invalid.

7.3 The Hon’ble Supreme Court in the case of Union of India and others vs. Rajeev Bansal reported in (2024) 469 ITR 46 meticulously analyzed the first proviso to Section 149(1)(b) of the new regime. The relevant paragraphs are reproduced below-

“45. The first proviso to Section 149(1)(b) provides thus:

“149. (1) No notice under section 148 shall be issued for the relevant assessment year, – (a) If three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) If three years, but not more than ten years, have elapsed from the end of the relevant assessment year unless the Assessing Officer has in possession of books of account or other documents or evidence which reveal that the income chargeable to tax, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year: Provided that no notice under section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April 2021, if such notice could not have been issued at that time on account of being immediately beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021:” [Emphasis supplied]

46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the “time limits specified under the provisions of” 149(1)(b) of the old regime. Thus, a notice could be issued under section 148 of the new regime for assessment year 2021-2022 and before only if the time limit for issuance of such notice continued to exist under section 149(1)(b) of the old regime.

47. In CTO v. Biswanath Jhunjhunwalla 1996 taxmann.com 1141 (SC)/[1996] 5 SCC 626 the Bengal Sales Tax Rules 1941 empowered the Commissioner to revise any assessment within four years from the date of assessment. Subsequently, the State Government issued a notification following the law to extend the time limit from four years to six years from the date of assessment. The extension of the time limit was challenged by the respondents on the ground that the assessments which had attained finality because of the expiry of the period of four years could not be reassessed. This Court observed that it was the clear intention of the notification to permit the Commissioner to revise any assessment made or order passed, provided the assessment had not been made before six years. It was held that if the legislative intention is clear and the language is unambiguous, full effect must be given to the legislative intention by reading the notification as applying not only to the incomplete assessments but also to assessments that had reached finality because of lapse of the earlier prescribed period. The principle that emanates from Biswanath Jhunjhunwalla (supra) is that the courts should give full effect to the legislative intention of granting reassessment powers to assessing officers unless the legislature, by express provision, states otherwise.

48. Notices have to be judged according to the law existing on the date the notice is issued. Section 149 of the old regime primarily provided two time limits: (i) four years for all situations and (ii) beyond four years and within six years if the income chargeable to tax which escaped assessment amounted to Rupees one lakh or more. After 1 April 2021, the time limits prescribed under the new regime came into force. The ordinary time limit of four years was reduced to three years. Therefore, in all situations, reassessment notices could be issued under the new regime if not more than three years have elapsed from the end of the relevant assessment year. For example, for assessment year 2018-2019, the four year period would have expired on 31 March 2023 under the old regime. However, if the notice is issued after 1 April 2021, the three year time limit prescribed under the new regime will be applicable. The three year time limit will expire on 31 March 2022.

49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.

50. Another important change under section 149(1)(b) of the new regime is the increase in the monetary threshold from Rupees one lakh to Rupees fifty lakhs. The old regime prescribed a time limit of six years from the end of the relevant assessment year if the income chargeable to tax which escaped assessment was more than Rupees one lakh. In comparison, the new regime increases the time limit to ten years if the escaped assessment amounts to more than Rupees fifty lakhs. This change could be summarized thus:

Regime Time limit Income chargeable to tax which has escaped assessment
Old regime Four years but not more than six years Rupees one lakh or more
New regime Three years but not more than ten years Rupees fifty lakhs or more

51. Given Section 149(1)(b) of the new regime, reassessment notices could be issued after three years only if the income chargeable to tax which escaped assessment is more than Rupees fifty lakhs. The proviso to Section 149(1)(b) limits the retrospectivity of that provision with respect to the time limits specified under section 149(1)(b) of the old regime.

52. In Ashish Agarwal (supra), this Court held that the benefit of the new regime must be provided for the reassessment conducted for the past periods. The increase of the monetary threshold from Rupees one lakh to Rupees fifty lakh is beneficial for the assesses. Mr Venkataraman has also conceded on behalf of the Revenue that all notices issued under the new regime by invoking the six year time limit prescribed under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs.

53. The position of law which can be derived based on the above discussion may be summarized thus: (i) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under section 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to Section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than Rupees fifty lakhs. ii. TOLA can extend the time limit till 31 June 2021

54. The proviso to Section 149(1)(b) of the new regime uses the expression “beyond the time limit specified under the provisions of clause (b) of sub section (1) of this section, as they stood immediately before the commencement of the Finance Act, 2021.” Thus, the proviso specifically refers to the time limits specified under section 149(1)(b) of the old regime……….”

7.4 Thus, the Apex Court held that “no notice under section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; if it is barred at the time when the notice is sought to be issued because of the ‘time limits specified under the provisions of’ 149(1)(b) of the old regime” (Para 46). This means that for AY 2015-16, a notice under the new Section 148 could only be issued if it was not time-barred under the old regime’s Section 149(1)(b) of the Act. Further, the Apex Court held that for the AY 2015-16, the six-year limitation period under the unamended Section 149(1)(b) expired on March 31, 2022 (six years from the end of the relevant assessment year, i.e., March 31, 2016). The Supreme Court explicitly stated that “a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice” (Para 49).

7.5 Now coming to the contention of the Revenue that the AO had initiated the proceedings by issuing the notice under clause (b) of section 148A of the Act well before 31/03/2022 i.e. on 25/03/2022 and hence the subsequent order passed u/s 148A(d) of the Act and the notice issued u/s 148 of the Act both dated 08/04/2022 are well within the time. In this regard we are of the considered opinion that section 149 of the Act stipulates the time limit to issue the notice u/s 148 of the Act& not the issuing of the notice u/s 148A(b) of the Act. This time limit has nothing to do with the issuance of show cause notice u/s 148A(b) of the Act & passing of the order u/s 148A(d) of the Act unlike in section 151 of the Act which categorically prescribed the specified authority for sanction for issue of notice for the purposes of both section 148 as well as section 148A of the Act. We are of the opinion that provisions of section 148A proceedings are completely different withthat of the 148 proceedings. After the amendment in Finance Act, 2021, the proceedings u/s 148 of the Act can only be commenced after completion of 148A proceedings, however subject to certain exceptions. Before issue of the notice u/s 148 of the Act, the AO shall conduct an enquiry, provide an opportunity of being heard to the assessee by serving SCN and after considering the reply furnished if any, decide, on the basis of material available on record including the reply of the assessee whether or not it is a fit case to issue notice u/s 148 of the Act by passing an Order. Thus,section 148A of the Act is a complete code in itself. In the present case, the contention of the assessee is that the notice issued u/s 148 of the Act dated 08/04/2022 is barred by limitation as per the 1st proviso to amended section 149(1) of the Act. Further section 149 of the Act stipulates the time limit for issue of the notice u/s 148 of the Act & therefore the contention of the Revenue that the proceedings initiated by the issuance of show cause notice u/s 148A(b) of the Act within the stipulated time period prior to the issue of notice u/s 148 is not at all tenable. The procedural compliance with Section 148A, while necessary, cannot validate a notice issued u/s 148 of the Act that is fundamentally flawed due to being issued beyond the statutory period of limitation.

7.6 Now coming to another contention of the Revenue that the notice under section 148A(b) of the Act was issued on 25/03/2022 by which assessee was asked to give response/ objection to the same within 01/04/2022. In response to the same, assessee did not file any objection. On a plain reading of 5th proviso to Section 149, the time period of 7 days allowed to assessee to give response/ objection needs to be excluded. Further as per 6th proviso a period of 7 days also need to be excluded. The assessing officer has passed the order u/s. 148A(d) on 08/04/2022 and issued the notice u/s. 148 on 08/04/2022, which very well falls within the limitation period. In this regard we are of the considered opinion that undisputedly the erstwhile third proviso to amended section 149(1) of the Act allows for the exclusion of the time taken for Section 148A proceedings.However, this exclusion is for computing the period of limitation as per section 149 of the Act. It does not override the first proviso to Section 149(1) of the Act, which acts as a threshold condition for the applicability of the new regime to old assessment years. If a notice was already time- barred under the old law, the exclusion of time under the 3rd or 4thprovisos cannot revive it. The exclusion cannot override the fundamental bar imposed by the first proviso to Section 149(1) of the Act.Asstated earlier the first proviso to amended section 149(1) acts as a statutory bar, preventing the issuance of a notice under Section 148 of the Act for the assessment year like AY 2015-16 (which began on or before April 1, 2021) if such notice could not have been issued under the time limits of the old law. We are of the considered opinion that first proviso to section 149(1) of the Act is a restriction & act as a gate keeper and the erstwhile 3rd& 4th Provisos (which allow for exclusion of time for certain events) cannot override this fundamental restriction. This means that even if there were delays due to assessee’s response or court stays, these exclusions cannot revive a notice that is already time-barred by the first proviso. In Assistant Commissioner of Income-tax v. Godrej Industries Ltd. [2024] 160 taxmann.com 13 (Bombay), for AY 2014-15, the High Court held that the validity of a notice must be judged on the law existing on the date of issuance of the Section 148 notice. It emphasized that “the fifth proviso cannot apply in a case where the first proviso applies because, if a notice under section 148 could not be issued beyond the time period provided in the first proviso, then the fifth proviso could not save such notices” (Para 15). This means that if the notice is already time-barred under the old regime as per the first proviso, the exclusion of time for Section 148A proceedings under the 3rd proviso or 4th provisos cannot revive it. Further, the Hon’ble Gujarat High Court in the case of Assistant Commissioner of Income-tax v. Devika Fibres (P.) Ltd. [2023] 153 taxmann.com 18 (Gujarat) clearly stated that “the notice which could not have been issued in the old regime period due to becoming time barred as per then operating provision, would also not be permissible to be issued post 01-4-2021” (Para 5.4.6). Thus, the embargo of the six-year limitation under the old regime continues in the new regime for assessment years prior to 2021-22.

8. It is apposite here to mention that under the similar facts & circumstance & for the similar AY 2015-16, the Hon’ble Jurisdictional High Court of Karnataka in the case of Mohammed Yaseen v. Income Tax officer reported in [2025] 175 taxmann.com 280 (Karnataka)has held as under-

“5. As rightly contended by the learned counsel for the petitioner, the material on record discloses that the impugned proceedings is relating to the Assessment Year 2015-16 in respect of the petitioner; however, it is an undisputed fact that the respondents issued impugned notice at Annexure-A2 under Section 148 of the I.T.Act on 01.04.2022, beyond the period of limitation and the same has already been held not to be permissible by the Apex Court in Rajeev Bansal’s case (supra), which reads as under:-

“19(e). The Finance Act, ([2021]) 431 ITR (St.) 52) substituted the old regime for reassessment with a new regime. The first proviso to Section 149 does not expressly bar the application of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. Section 3 of Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 applies to the entire Income-Tax Act, including Sections 149 and 151 of the new regime. Once the first proviso to Section 149(1)(b) is read with Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020, then all the notices issued between April 1, 2021 and June 30, 2021 pertaining to assessment years 2013-14, 2014-15, 2015-16, 2016-17, and 2017-18 will be within the period of limitation as explained in the tabulation below:

assessment year (1) Within 3 years (2) Expiry of limitation read with TOLA for (3) Within six years (4) Expiry of limitation read with TOLA for (4) (5)
2013-2014 31-3-2017 TOLA not applicable 31-3-2020 30-6-2021
2014-2015 31-3-2018 TOLA not applicable 31-3-2021 30-6-2021
2015-2016 31-3-2019 TOLA not applicable 31-3-2022 TOLA not applicable
2016-2017 31-3-2020 30-06-2021 31-3-2023 TOLA not applicable
2017-2018 31-3-2021 30-06-2021 31-3-2024 TOLA not applicable

19(f). The Revenue concedes that for the assessment year 2015-16, all notices issued on or after April 1, 2021 will have to be dropped as they will not fall for completion during the period prescribed under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020; 49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-22 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten-years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-13, the ten- year period would have expired on March 31, 2023, while the six-year period expired on March 31, 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-13 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.

6. Subsequently, in Nehal Ashit’s case (supra) also, the Apex Court reiterated the very same position and dismissed the appeal filed by the Revenue on the ground that the notice issued after 01.04.2022 was barred by limitation and the impugned proceedings are not permissible beyond period of limitation. In the instant case, it is an undisputed fact that the impugned proceedings is relating to the Assessment Year 2015-16, while the impugned notice under Section 148 of the Act dated 01.04.2022 was issued beyond/after 01.04.2021 which is impermissible in law and barred by limitation and consequently, the impugned orders/notices etc., deserve to be quashed.

7. In the result, I pass the following:

– ‘ORDER

(i) Petition is hereby allowed.

(ii) The impugned orders/Notices at Annexures-A1, A2, B, C1, D1 and E1 dated 01.04.2022, 01.04.2022, 15.03.2022, 09.03.2022, 27.08.2024 and 27.08.2024 respectively and subsequent orders/notices issued by the 1st respondent are hereby quashed.”

8.1 Further,the Hon’ble High Court of Karnataka in the case of Tarish Investment and Trading Company (P) Ltd v. Union of India reported in [2025] 179 taxmann.com 198 (Karnataka) has under the similar facts & circumstances but for the AY2017-18 also taken a similar view. The relevant paragraph of the said judgment is reproduced below-

“2. The petitioner in the subject petition calls in question an order passed by the 2nd respondent under Section 148A(d) of the Income Tax Act and consequent notices so issued to the petitioner under section 148 of the Income Tax Act, 1961. The notice reads as follows: “Notice under section 148 of the Income-tax Act, 1961 Sir/Madam/M/s. 1. I have the following information in your case or in the case of the person in respect of which you are assessable under the Income tax Act, 1961 (here in alter referred to as “the Act”) for Assessment Year 2017-18 information in accordance with the risk management strategy formulated in this regard suggesting that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. Order under sub-section (d) of section 148A of the Act has been passed in such case vide DIN ITBA/AST/F/148A/2024-25/1064704419(1) dated 07/05/2024 and annexed herewith for reference, 2. I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2017-18 and I, hereby, require you to furnish, within a period of three months from the end of month in which this notice is issued, a return in the prescribed form for the Assessment Year 201718.

Note:- Please note that any return of income, required to be furnished by you under this section and furnished beyond the period allowed shall not be deemed to be a return under section 139 of the Act. (Proviso 3 to Section 148) NITHAN RAJ T.N. CIRCLE 7(1)(1), BANGALORE” 3. The notice itself indicates that it is issued for the Assessment Year 2017-18 and is admittedly issued on 7.5.2024. Learned counsel appearing for the petitioner submits that the notice is barred by limitation, as the limitation prescribed under Section 148 is for a period of six years from the date of end of the Financial Year of the Assessment Year. Admittedly, Financial Year of Assessment Year, 2017-18 comes to an end on 31.03.2018 and the limitation would cap at 31.03.2024.

4. Learned counsel for the petitioner would submit that the issue in the lis stands covered by the three Judge Bench of the Apex Court in the case of UOI v. Rajeev Bansal [2024] 167 taxmann.com 70/301 Taxman 238/469 ITR 46 (SC), in which the Apex Court at Paras 49, 53 and 60 has held as follows:

“49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on March 31, 2023, while the six year period expired on March 31, 2019. Without the proviso to section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 2012-2013 if the escaped assessment amounted to rupees fifty lakhs or more. The proviso limits the retrospective operation of section 149(1)(b) to protect the interests of the assesses.

53. The position of law which can be derived based on the above discussion may be summarized thus: (i) Section 149(1) of the new regime is not prospective. It also applies to past assessment years; (ii) The time limit of four years is now reduced to three years for all situations. The Revenue can issue notices under Section 148 of the new regime only if three years or less have elapsed from the end of the relevant assessment year; (iii) the proviso to Section 149(1)(b) of the new regime stipulates that the Revenue can issue reassessment notices for past assessment years only if the time limit survives according to section 149(1)(b) of the old regime, that is, six years from the end of the relevant assessment year; and (iv) all notices issued invoking the time limit under section 149(1)(b) of the old regime will have to be dropped if the income chargeable to tax which has escaped assessment is less than rupees fifty lakhs. ii. Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 can extend the time limit till June 31, 2021 60. The above principles can be applied as follows to the factual situation in the present appeals: (i) The Finance Act, 2021 ([2021] 432 ITR (St.) 52) substituted Sections 147 to 151 of the Income Tax Act with effect from April 1, 2021;

(ii) sections 147 to 151 of the old law ceased to operate from April 1, 2021; (iii) after April 1, 2021, any reference to the Income Tax Act means the Income Tax Act as amended by the Finance Act 2021; (iv) the time limits prescribed for issuing reassessment notices under section 149 operate retrospectively for three years for all situations and six years in case the escaped assessment amounts to or is likely to amount to more than rupees fifty lakhs.” (Emphasis supplied)

5. The High Court of Delhi in two of the judgments has followed the said judgment of the Apex Court in Rajeev Bansal supra. In Sheetal International (P.) lLtd. v. Chief CIT [2024] 168 taxmann.com 308 (Delhi), it is held as under:

“1. Issue notice.

2. Learned counsel appearing for the respondents accepts notice. 3. The petitioner has filed the present petition, inter alia, impugning an order dated 01.05.2024 (hereafter the impugned order) issued under Section 148A(d) of the Income Tax Act, 1961 (hereafter the Act) for the assessment year (AY) 2017-18 as well as the notice dated 01.05.2024 issued under Section 148 of the Act.

4. The petitioner contends that the said notice was issued beyond the period of limitation as prescribed in first proviso to Section 149(1) of the Act.

5. The learned counsel appearing for the petitioner submits that the issue stands covered by the decision of this Court in Manju Somani v. Income Tax Officer [2024] 165 taxmann.com 675/300 Taxman 516/466 ITR 758 (Delhi): Neutral Citation: 2024:DHC:5411-DB.

6. It is also relevant to note that the Supreme Court in a recent decision of Union of India v. Rajeev Bansal: 2024 SCC OnLine SC 2693/[2024] 167 taxmann.com 70 (SC) (SC) has observed as under:

“46. The ingredients of the proviso could be broken down for analysis as follows: (i) no notice under Section 148 of the new regime can be issued at any time for an assessment year beginning on or before 1 April 2021; (ii) if it is barred at the time when the notice is sought to be issued because of the “time limits specified under the provisions of” 149(1)(b) of the old regime. Thus, a notice could be issued under Section 148 of the new regime for assessment year 20212022 and before only if the time limit for issuance of such notice continued to exist under Section 149(1)(b) of the old regime.

**** ** 49. The first proviso to Section 149(1)(b) requires the determination of whether the time limit prescribed under Section 149(1)(b) of the old regime continues to exist for the assessment year 2021-2022 and before. Resultantly, a notice under Section 148 of the new regime cannot be issued if the period of six years from the end of the relevant assessment year has expired at the time of issuance of the notice. This also ensures that the new time limit of ten years prescribed under Section 149(1)(b) of the new regime applies prospectively. For example, for the assessment year 2012-2013, the ten year period would have expired on 31 March 2023, while the six year period expired on 31 March 2019. Without the proviso to Section 149(1)(b) of the new regime, the Revenue could have had the power to reopen assessments for the year 20122013 if the escaped assessment amounted to Rupees fifty lakhs or more. The proviso limits the retrospective operation of Section 149(1)(b) to protect the interests of the assesses.”

7. In view of the above, the present petition is allowed. The impugned order dated 01.05.2024 as well as the notice issued under Section 148 in respect of the AY 2017- 18 are set aside.”

8.2 In view of the above discussions & respectfully following the decisions of the Hon’ble Apex Court as well as Jurisdictional High Court, we are of the considered opinion that the notice issued under Section 148 of the Income Tax Act, 1961, on April 08, 2022, for Assessment Year 2015-16, is invalid& barred by time. The first proviso to the substituted Section 149(1) acts as a statutory bar, as the six-year limitation period under the old regime for AY 2015-16 expired on March 31, 2022. The procedural compliance with Section 148A or the exclusion of time under the 3rd or 4th erstwhile provisos cannot override this fundamental jurisdictional defect of limitation. Since we have held the notice dated 08/04/2022 issued under section 148 of the Act to be barred by limitation & therefore the consequent order passed u/s 147 r.w.s 144C(13) of the Act dated 15/01/2025 deserve to be quashed. Further, since we have adjudicated the sole legal ground in favour of the assessee, the other grounds raised by the assessee becomes academic.”

8. Respectfully following the above decision of this coordinate bench of this Tribunal, we are inclined to held that the notice dated 30.07.2022 issued u/s 148 of the Act is barred by limitation and accordingly, the consequent reassessment order passed u/s 147 of the Act dated 30.05.2023 deserved to be quashed. Since we have adjudicated the sole legal ground in favour of the assessee, the other grounds raised by the assessee becomes academic.

9. In the result the appeal filed by the assessee is allowed.

Order pronounced in the open court on 28th Sept, 2026.

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CA Sandeep Kanoi
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Bombay HC Imposes ₹25,000 Costs on DCIT for Ignoring Binding Tax Ruling

November 4, 2026
TDS on Property Purchase After 1 April 2026: What Changed When Form 141 Replaced Form 26QB

TDS on Property Purchase After 1 April 2026: What Changed When Form 141 Replaced Form 26QB

November 4, 2026
Angel Tax Abolished: FEMA Valuation and Compliance for Shares Issued to Foreign Parents

Angel Tax Abolished: FEMA Valuation and Compliance for Shares Issued to Foreign Parents

November 4, 2026